Food for Thought

November 2014

Written by Anna Raddatz | Photos by Anthony Harden

In its “Monthly Trend Briefing” for October 2014, trendwatching.com identified “brand sacrifice” as an upcoming business trend for 2015. The challenge they posed to companies: What are you prepared to sacrifice to reduce negative impacts on consumers, the society, or the environment?

This sounds simple enough. But the reason they see this as a coming trend doesn’t reflect quite as well on consumers as you might think: “In the pursuit of the nirvana that is guilt-free consumption, consumers are looking for brands to make sacrifices—so they don’t have to.”

In other words, a lot of us know that air travel is a major polluter, but few of us actually fly less frequently because of it. Many of us recognize that retail goods are often produced under abhorrent labor conditions, but we buy them anyway. In short, the values we proclaim aren’t always the ones we act upon.

So…what does this have to do with an Asheville grocery store owner? Quite a bit, actually, if that owner is John Swann.

Swann defines himself as both an entrepreneur and a food activist. He has built a career on adamantly living his values, creating or helping run businesses that he sees as good for both people and the planet. With his latest venture, Katuah Market, an independent natural food grocery store in Biltmore Village, Swann is building a business that not only goes above and beyond in supporting the local food scene, but also challenges people to really look at their habits—everything from where they shop and what they buy, to what they do for a living.

“Everyone that is alive today should take a look in the mirror,” says Swann, “and say, ‘What am I doing to make the world a better place? Why am I doing what I’m doing?’”

Anyone who knows, or has even heard of, Swann knows that he’s not afraid to say what he thinks. A well-known player in the Asheville business scene, Swann has an extensive background in the specialty food industry. He was a key player in Earth Fare’s success and expansion and was a co-founder of the popular Asheville Greenlife store. He has been quoted extensively in local media regarding the controversial sale of Greenlife to Whole Foods. He has mentored local food producers and held leadership roles in local food-focused organizations.

But at the age of 63, with his new venture just under a year old, he still has plenty to say.

From Engineering to Entrepreneur

Swann grew up in Tucson, Arizona. He attended the University of Arizona, studying electrical engineering and systems engineering. But before he could finish school, the wandering bug bit him. He left the Tucson area at the age of 23 in order to travel around the country and be, as he puts it, “footloose and fancy free.” Those travels took him through Western North Carolina, where he was immediately “transfixed” by the mountainous landscape. He settled in Boone in 1974.

By this time, he was becoming aware of the natural food movement. “Organic food was just starting to become a topic,” Swann recalls. “It resonated with me. I thought it was a smart thing environmentally and nutritionally.”

Richie Whitson, store manager, & John Swann, CEO, of Katuah Market

Back in Tucson, he had joined the Food Conspiracy Co-op (still in existence today), which Swann calls his “first introduction to natural food.” Upon arriving in Boone, he joined the Mountain Food Cooperative and became involved in its management. As part of that role, he helped develop the Appalantic Federation of Cooperatives, which opened a food distribution warehouse serving cooperatives, operating out of Roanoke, Virginia.

Through the 1980s and ’90s, Swann managed or owned a variety of businesses in the realm of food manufacturing, retail, wholesale, and distribution—from acting as operations manager for Watauga Herb Company, to owning and operating Bean Mountain Natural Foods, a producer of organic tofu and tempeh.

In 1995 Swann got the job that began to put him on the map for most Ashevillians: Earth Fare hired him as a grocery manager. He worked at the company for seven years, playing a pivotal planning role as the brand expanded from one location to three, and putting his systems background to work to develop the infrastructure that facilitated that growth. He went on to become purchasing director as even more locations were added. But as growth ramped up, and the business was sold and resold to different venture capital groups, Swann became uncomfortable and parted ways with the company.

“They got more and more corporate,” he says. “I found that the philosophy that initially drew me into the industry was not shared by the management at the time.”

Swann was interested in moving on to a new venture and wanted to stay in Asheville, but due to a non-compete agreement with Earth Fare, he needed to look elsewhere. It was around this time that he met Chuck Pruett, the man who had opened the original Greenlife store in Chattanooga, Tennessee. Swann says Pruett came to him for his knowledge of natural foods and his technical expertise, and that he drove back and forth from Asheville to Chattanooga to help with the store until his non-compete agreement was over.

At that point, the two partnered up to open a second Greenlife location in Asheville in 2004. The Asheville store performed extremely well; Swann says it was the highest volume independent natural food store in the Southeast.

However, in a move that was thoroughly covered by local media at the time, Swann’s partner decided to sell both stores to Whole Foods in 2010—a sale that Swann strongly disagreed with, but, as minority partner, was unable to stop. “From my point of view, it was a very, very foolish move,” says Swann, “and the way that it went down was very discouraging to me.”

Swann walked away a very disappointed man, feeling betrayed by his business partner and upset that a national, corporate entity would be taking over the small, locally-nurtured store that he had worked hard to bring to fruition.

A New Start

Approaching the age of 60, Swann could have easily thrown in the towel and called his career complete. And for a bit, he considered doing that.

With his reimbursement from the Greenlife sale, Swann says he had “enough money to eat beans the rest of my life and do nothing”—meaning that he could have conceivably retired if he budgeted very carefully. But after some thought, he realized he didn’t want to do that. “I felt like Asheville was robbed of a community-based store that helped a lot of local producers,” he says. “I felt like my personal mission was unfulfilled.”

In addition, Swann says that after the Greenlife sale, he was approached by “dozens of customers,” as well as some staff, eager to learn what he would do next and how they could help. The answer quickly became clear to Swann: he would have to start another grocery store. This time, on his own terms.

After three years of planning and raising capital (from both banks and private investors), Swann opened Katuah Market in December of 2013 in Biltmore Village. The opening time itself was not ideal. Construction delays (which Swann partially blames on city regulations) meant the business missed the Thanksgiving surge. Then a record-setting, snowy winter kept shoppers at home in January and February.

But as people did start checking out Katuah, they discovered something of a gem. At 15,500 square feet, the store is large enough to offer a good selection in each department, but small enough to avoid the overwhelming feeling that is inherent to so many huge grocery stores. The interior is simple and clean, with cement floors and reclaimed wood trim. A hot bar offers healthy meals from breakfast through dinner, with plenty of vegetarian and vegan options. And a sizable indoor cafe is paired with abundant outdoor seating on the shaded, curved front patio—where customers are often serenaded by a guitarist, flute player, or other musician.

While at first glance it’s clear that Katuah caters to consumers on the “crunchy” end of the spectrum, with lots of organic and natural products, and perhaps specifically those shoppers who don’t need to pinch pennies (prices are generally higher than at bargain groceries), the things that make Katuah different from other stores aren’t always so obvious.

An Obsession with Local

Katuah’s quality standards dictate that the store will only sell products that are free of synthetic pesticides, hydrogenated oil, bleached flour, artificial preservatives, animal by-products, and antibiotics, as well as a variety of other chemicals.

In addition, the store’s website says that the selection “emphasizes organic and locally-produced food.” However, this may be something of an understatement. Swann explains that Katuah stocks products from over 300 local vendors, which he says is “far more than any other Asheville store.” (For comparison, the French Broad Food Co-op currently carries 101 local vendors; Whole Foods, Greenlife, Earth Fare, and Ingles could not be reached for comment.)

Katuah’s meat department is an example of this local focus. All of the meat available at the butcher counter is 100% local, from producers like Hickory Nut Gap Farm, Apple Brandy Beef, and Dry Ridge Farm. Swann claims that the national sales manager for United Natural Foods, the store’s primary distributor, told him that Katuah is the only store he knows of in the United States whose fresh meat selection is all from local sources. In short, it’s basically unheard of.

In addition, Swann says that Katuah defines “local” as being produced within a well-defined set of 60 nearby counties (as defined by the Appalachian Sustainable Agriculture Project’s “Appalachian Grown” local certification program), while other food retailers use much looser definitions. “The other stores are very good at marketing the image that they support local and organic, but when you actually look at the products, that’s not the case.” He says one store he spoke to defined local as any place that’s within a day’s drive of Asheville, which could range from Orlando to New York City, and that another store claims to sell “local shrimp.”

This map illustrates Katuah’s definition of “local,” as also defined by the Appalachian Sustainable Agriculture Project as the “Appalachian Grown Region.” Covering a grouping of 60 counties within 100 miles of Asheville, this certification keeps shoppers aware of what is really meant by the term “local.”

While Swann’s focus on local may seem to approach fanaticism, local organizations can attest to just how important Swann’s commitment is.

Chris Reedy, executive director of Blue Ridge Food Ventures (BRFV), a local organization that helps food producers bring their products to market, says that Swann’s work in the local food scene over the years has had an incredible impact. Recently, BRFV shot a promotional video at Katuah, featuring products that were made by its clients and available for sale at Katuah. As they gathered the products in the store, Reedy says there were so many that they “started with a hand basket, and ended up with a cart.”

“We’re really lucky to have someone like [Swann] give producers their first retail dance,” says Reedy. He explains that it’s hard for new vendors to sell their wares to larger grocery chains, so it’s important to have a small store that will give those entrepreneurs that initial retail experience. “Katuah represents a gateway to a larger food scene,” Reedy says.

Swann not only supports BRFV clients by selling their products, he also works directly with them. He participates in BRFV’s “How to Start a Food-Based Business” class, mentoring entrepreneurs and giving presentations about how to run a specialty food business, pulling from his extensive background in food manufacturing, distribution, and purchasing. In addition, Reedy says he often asks Swann for advice on BRFV as a whole; if they’re thinking of developing a new program or service, Reedy will ask Swann for his input. “I’ve always considered him to be part of our steering committee,” says Reedy.

Another organization close to Swann’s heart is the Appalachian Sustainable Agriculture Project (ASAP), a nonprofit that links farmers to markets. A long-time board member (and the board’s current vice president), Swann fills Katuah’s produce department with photos of the local farmers whose crops have been certified “Appalachian Grown” by ASAP.

ASAP’s executive director, Charlie Jackson, says that Swann probably works with more individual producers than anyone in the community. “He’s an entrepreneur, and there are plenty of those,” says Jackson. “But he’s good at pushing the boundaries. He’s committed to local at a level that few others can compare to.”

As if to prove this point, this year Katuah was voted “most local centric store” in Mountain Xpress’ “Best of WNC” readers’ poll.

So why is all of this local stuff so important? Swann explains that as major national brands grow and consolidate, they are dominating the market to such an extent that it’s difficult or impossible for newer or smaller businesses to compete. Swann says this leads to lower quality, fewer choices, and an uneven playing field.

On an agricultural and economic level, he doesn’t think this is a sustainable model. “American business has always been supported by fuel subsidies,” he says. “The gas cost has been artificially held down to allow the business community to thrive. But there’s a hidden cost there. It’s vulnerable to economic, environmental, and social changes.” To Swann, and many like-minded folks, decentralizing the food system and developing strong local food economies is the solution.

It also means that consumers have a more direct relationship with their food and the people who make it. For Swann, this personal connection is a driving force, and one of his favorite things about running Katuah.

“I love walking through the aisles and seeing products on the shelf that I helped bring to market,” he says. “I don’t see labels; I see the faces of the people who made the products.”

Small Market, Big Competition

Anyone who lives in Asheville these days is well aware of the recent boom in food shopping options. In 2013, in addition to Katuah Market, Trader Joe’s and Harris Teeter opened their first Asheville stores. In 2014 Fresh Market opened their second Asheville store, Whole Foods opened on Tunnel Road, and Publix and Aldi announced new stores. This is in addition to existing groceries like the 15 Ingles locations that are within 10 miles of downtown Asheville, as well as smaller groceries like the French Broad Food Co-op and West Village Market.

For a city with a population of around only 85,000 people, that’s a lot of grocery stores. As Swann says, “We’re at the point of saturation.”

Because of this, it could be argued that Swann’s timing with Katuah was less than ideal. But Swann’s take is that each store appeals to slightly different portions of the market, and that Katuah attracts customers who really care about high-quality local and organic foods, and people who are willing to pay a bit more to support a community-based business.

But he also admits that the first year in business has been a bit rough. After a slow winter, the number of transactions have picked up, now at 900 to 1,000 transactions per day, a number Swann is happy with. However, the average amount spent during those transactions is lower than he’d like. This is due to the fact that less than half of Katuah’s customers do their weekly grocery shopping at the store; the other half are buying only a few items or are grabbing a quick meal from the store’s popular hot bar, cafe, or deli counter. In addition, Swann says the store experienced a bit of a slump when the Whole Foods opened on Tunnel Road in August.

One thing that Swann has found particularly vexing about his new venture is the effect of location. Any business owner is well familiar with the adage, “Location, location, location.” And by most measures, the Katuah location is a good one; it’s on a major thoroughfare (Hendersonville Road) in a popular retail area (Biltmore Village) only five minutes from downtown. There’s even ample parking. But the invisible wall Swann has discovered is the small geographic orbits of local residents. In short, Ashevillians don’t wander far from their own neighborhoods.

Swann says that there are three factors that influence the success of a business: customers that meet the right demographics (income level, etc.), customers that fit the right psychographics (i.e. people who care about what you’re selling), and the right level of population density or proximity.

Dividing the city into compass-based quadrants, Swann explains that the only area that fits all three for high-end natural food stores is North Asheville—which is why Merrimon Avenue is home to many of those establishments. But it dumbfounds him as to why those ideal customers won’t make the slight sacrifice in travel time to support a truly local grocery store.

“My biggest challenge and surprise has been how hard it is to get people to drive four miles out of their way to shop their values versus convenience,” he says.

Fighting Goliath

Some of those customers might respond with a question of their own for Swann: What’s so bad about Whole Foods or Trader Joe’s? As corporations go, they’re about as “do-gooder” as it gets. Whole Foods has received awards from the EPA for its green energy policies, and, like Katuah, has strict quality standards that address animal welfare and unacceptable ingredients. Even Swann has to admit that some of the work they do is positive, like their Local Producer Loan Program, which provides low-interest loans to local farmers and food producers.

[quote float=”right”]“The business has to make money, but just making money for the sake of making money is not a value I hold particularly high,” Swann says.[/quote]But to Swann, the simple fact that stores like these are run by multi-billion dollar corporations means that they are inherently flawed. First of all, Swann says his theory is that the bigger a business gets, the more it’s driven by internal business needs (say, the need to make a warehouse profitable or to increase profits for investors), often at the expense of product quality, the support of local community, or customer needs or desires.

In addition, Swann argues that the corporate model of dominating the market and putting others out of business is a dangerous one. “I feel there is room in the capitalist model for different flavors and twists on business,” he says. “But when a company becomes like Walmart, which has employees who depend on food stamps, is that good? Are we better off as a society?”

For his part, Swann says we’re not. And not just because it’s a large corporation that took over his Greenlife store. While there are clearly hurt feelings remaining from that transaction, Swann says that his concern is more about the bigger picture.

“I’m troubled that the dominant paradigm is not good for people and not good for the planet,” he says. “It’s only good for making money. If that’s your goal in life, then that’s what you should do.”

But it’s not what Swann aims to do. He says there are certainly easier ways to make money than by running a small, independent grocery store. Instead, his focus is on using his time, energy, and resources to support the city he calls home.

“The business has to make money, but just making money for the sake of making money is not a value I hold particularly high,” he says. “In terms of how I spend my time every day, I choose to work in this community to try to help make it a better place. That’s what gets me out of bed in the morning.”

Food for Thought was last modified: August 1st, 2016 by Hanna Trussler